Apple supplier Foxconn in talks to build factory in Saudi Arabia

Foxconn Technology Group is in talks with Saudi Arabia about jointly building a $9 billion facility that could make microchips, electric-vehicle components and other electronics, the Wall Street Journal reported on Monday.

Saudi Arabia is reviewing Foxconn’s offer to build a dual-line semiconductor contract manufacturing facility known as a “foundry” in Neom, a tech-focused city-state it is developing in the desert, the report said, citing people familiar with the matter.

The company and Saudi Arabia authorities did not immediately respond to Reuter’s requests for comment.

Foxconn, the world’s largest contract electronics manufacturer and a major Apple (AAPL.O) supplier, has expanded into areas including electric vehicles (EVs) and semiconductors in recent years.

The company and other Taiwanese firms like TSMC are looking to diversify their production amid U.S.-China trade tensions, which have impacted the semiconductor industry.

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Besides Saudi Arabia, Foxconn is also talking with the United Arab Emirates about potentially situating the project there, the report said.

Riyadh wants the company to guarantee that it would direct at least two-thirds of the foundry’s production into Foxconn’s existing supply chain, according to the report.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, has been signing large investment deals, including plans in Taiwan and India. Last year, however, it drastically scaled back a planned $10 billion factory in Wisconsin that former U.S. President Donald Trump once called “the eighth wonder of the world”.